As filed with the Securities and Exchange Commission on November 21, 2000
Registration No. 333-_____________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-1 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
IMAGINENET CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C> <C>
Nevada 9995 454110 65-087-8035
------------------------- ------------------- ----------------------- -------------------
(State or Other (Primary Standard (North American (IRS Employer
Jurisdiction of Industrial Industry Identification
Incorporation or Classification Classification Number ("EIN") Number)
Organization) ("SIC") Number) System
("NAICS")Number)
</TABLE>
---------------------------------------
222 Lakeview Avenue - Suite 160
West Palm Beach, Florida 33401
(561) 832-5696
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive
office)
---------------------------------------------------------------------------
Copy To:
Carl N. Duncan, Esq.
Duncan, Blum & Associates
5718 Tanglewood Drive
Bethesda, Maryland 20817
(301) 263-0200
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the
Registration Statement
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following
box: [x].
<TABLE>
<S> <C> <C> <C> <C>
====================== ==================== ==================== ==================== ====================
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to be Amount to be Offering Price per Aggregate Registration
Registered Registered Share Offering Price Fee
---------------------- -------------------- -------------------- -------------------- --------------------
Shares of Common 2,240,000
Stock Shares $1.00 $2,240,000 $591.36
====================== ==================== ==================== ==================== ====================
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
an amendment which specifically states that the Registration Statement shall
thereafter become effective in accordance with Section 8 (a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
Disclosure of Alternative Used: Alternative 1 |X| Alternative 2 |_|
<PAGE>
================================================================================
PROSPECTUS
================================================================================
IMAGINENET CORP.
(A Developmental Stage Company)
222 Lakeview Avenue - Suite 160
West Palm Beach, Florida 33401
(561) 832-5696
Offering at $1.00 per Share 100,000 -1,000,000 Shares ($100,000-$1,000,000)
of Common Stock.
Selling Shareholders May also be Selling up to 1,240,000 Additional Shares
Company Information
>> Our objective is to sell and distribute musical and related instruments
and devices via the Internet to the general public. We intend to
qualify our shares for quotation on the NASD Over-the-Counter Bulletin
Board ("OTCBB") concurrently with the date of this prospectus.
Terms of the Initial Offering Period
>> The initial offering period will be from 2-9 months from the date
listed in this prospectus unless it is terminated earlier.
>> During the initial offering period, we will sell shares at $1.00 per
share with the minimum purchase being $500 (500 shares). Since there is
no selling commission, all proceeds from the sales will go to us.
>> This offering is being made on a self-underwritten basis by us through
our only principal, William H. Ragsdale, without the use of securities
brokers. All proceeds from the sale of shares will be held in an
attorney escrow account maintained by Duncan, Blum & Associates,
Bethesda, Maryland, our securities counsel.
>> If we do not sell a minimum of $100,000 of (100,000) shares during the
initial offering period, we will return, without interest, all money
from shares sold.
Additional Shares Being Offered
>> We will not receive any proceeds from the additional 1,240,000 shares
that may be offered by our selling shareholders.
You must meet certain requirements in order to purchase the shares offered in
this prospectus. You must indicate in the Subscription Agreement that you have
either a net worth of at least $100,000 (exclusive of home, furnishings and
automobiles) or a net worth of at least $50,000 (also exclusive of home,
furnishings and automobiles) and an annual adjusted gross income of not less
than $25,000.
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Preliminary Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
================================================================================
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
No one is authorized to give any information not contained in this prospectus in
connection with this offering and, if given, you should not rely on this
information. This prospectus should not be considered an offer to any person to
whom such an offer would be unlawful.
You should note there is substantial doubt about our ability to continue as a
going concern. Carefully consider the risk factors beginning on page 4 of this
prospectus.
================================================================================
December ____, 2000
<PAGE>
Table of Contents
Descriptive Title
Page
PROSPECTUS SUMMARY............................................................3
SUMMARY FINANCIAL DATA.........................................................4
RISK FACTORS...................................................................4
RELATED PARTY TRANSACTIONS.....................................................6
FIDUCIARY RESPONSIBILITY OF THE COMPANY'S MANAGEMENT...........................7
SELLING SHAREHOLDERS...........................................................7
APPLICATION OF PROCEEDS.......................................................10
CAPITALIZATION................................................................11
DILUTION......................................................................11
THE COMPANY...................................................................12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.............................................18
ABSENCE OF CURRENT PUBLIC MARKET AND DIVIDEND POLICY..........................19
DESCRIPTION OF CAPITAL STOCK..................................................19
SUBSCRIPTION PROCEDURE........................................................20
ERISA CONSIDERATIONS..........................................................21
LEGAL MATTERS.................................................................21
EXPERTS.......................................................................21
AVAILABLE INFORMATION.........................................................21
APPENDIX I (FINANCIAL STATEMENTS)............................................I-1
APPENDIX II - SUBSCRIPTION
AGREEMENT...................................................................II-1
<PAGE>
Prospectus Summary
The following is a summary of the information contained in this
prospectus. Before making any investment, you should carefully consider the
information under the heading "Risk Factors."
The Company ImagineNet Corp. was incorporated in Nevada on November
24, 1998 but has had no revenues to date. Our objective
is to sell and distribute musical and related
instruments and devices to the general public via
the Internet. We are currently a developmental stage
company organized by William H.Ragsdale, our President,
Director and sole executive.
Securities Maximum amount of shares offered ($1,000,000):1,000,000
Offered by the shares at $1.00 per share. Minimum amount of shares
Company offered ($100,000): 100,000 shares at $1.00 per share.
Offering Initial: We will begin to sell shares on the date
listed on the cover Period(s) of this prospectus. We
may continue to offer shares from 2 to 9 months from
the date of this prospectus. This initial offering
period will close once the minimum $100,000 in shares
is sold and we close the escrow account. If the minimum
$100,000 in shares is not sold, we will return all
proceeds to the investors without interest.
Continuous: If as expected we do not sell the maximum
$1,000,000 in shares during the initial offering
period, we will update this prospectus and continue the
offering for up to 24 months from the date this
prospectus is issued, updating as necessary. During
this continuous offering period, we will sell
subscriptions for shares at $1.00 per share until a
market develops for the shares. We will then sell the
shares at the prevailing market rate.
Proceeds Held Proceeds from these sales will not be paid to the
company until the $100,000 minimum in sales is
achieved. Investors are reminded that, given the up to
9 month duration of the initial offering period,
investments may be held in escrow until the end of the
initial offering period. Even if interest is earned, it
will not be returned to investors because of pertinent
state law pertaining to attorney escrow accounts.
Minimum The minimum purchase is $500.
Subscription
Risks and This investment involves substantial risks due in part
Conflicts of to the costs which we will incur and the highly
Interest speculative nature of our contemplated Internet-based
musical instruments business. Risks inherent in
investing in the company are discussed under "Risk
Factors," including the substantive doubt about our
ability to continue as a going concern.
Plan of The shares are being on a self-underwritten basis
Distribution by William H. Ragsdale, our sole principal.
Application of The proceeds of the offering are expected to be used
Proceeds to continue business operations and expand the scope
of the business. In the event we receive more than the
$100,000 minimum, we intend to be more aggressive in
implementing our business plan.
<PAGE>
Summary Financial Data
The following is a summary of the financial data contained in this
prospectus. This information reflects our operations from inception (November
24, 1998) to July 31, 2000.
>> Current assets $37,950
>> Noncurrent assets 0
>> Current liabilities 0
>> Gross Revenues 0
>> Gross Profit ($18,050)
>> Loss from continuing operations ($18,050)
>> Net loss ($18,050)
Risk Factors
We are a new development stage company. Our main efforts thus far have
been geared toward raising funds in order to commence business operations. You
should, therefore, be aware of the difficulties normally encountered by a new,
developing company. The likelihood that we will succeed must be considered in
light of the problems, expenses and delays frequently encountered as listed
below. Before making an investment, you should consider carefully the following
risk factors
1. Developmental Stage Company with No Net Worth. We are in the early stage of
development and have no net worth. We have been largely inactive to date,
having conducted no business except for fund raising and organizational
activities. You should be aware of the difficulties normally encountered by
a new enterprise in its development stage, including under-capitalization,
cash shortages, limitations with respect to personnel, technological,
financial and other resources and lack of a client base and market
recognition, most of which are beyond our control. Because of these
factors, there is no guarantee that our activities will attain the level or
recognition and acceptance necessary for us to become a viable business.
2. No Operating History or Revenues with which to Conduct Business and Its
Affect on our Ability to Sustain Operating Expenses. To date, we have not
yet begun business operations and, accordingly, have received no operating
revenues or earnings. As of July 31, 2000, we have assets totaling $37,950,
mainly consisting of paid-in-capital of $50,000, less paid expenses. Our
success is dependent upon obtaining additional financing from our intended
Internet operations, placement of our equity and from third party
resources. Our Internet marketing success depends upon our ability to
generate sufficient sales to enable us to continue our business operations.
There is no assurance that we will be able to obtain additional debt or
equity financing from any source. There can be no assurance that our
financial condition will improve or that the operating revenues generated
will be sufficient to cover expenses. In the event we cannot sustain
operating expenses, we will have to discontinue operations.
3. No Present Client Base and Limited Funds to Attract Customers. We currently
have no customers and there can be no assurance that we will be successful
in obtaining customers as planned through either our Internet sales,
placement of equity or from third party resources. Further, the very
limited funding currently available to us will only permit us to conduct
business on a very limited scale. We may therefore never generate enough
revenues to market musical products sufficient to achieve a commercially
viable client base. In the event we are unable to attract and maintain
viable business operations, we will have to close our business.
<PAGE>
4. Competition May Be Too Strong for Business to Obtain Enough Customers. The
markets in which we are engaged are subject to vigorous competition. Our
competitors include other Internet-based musical instrument sales websites,
mail order catalogue and retail outlet companies, many of which are larger
and have greater financial and marketing resources than we do. To the
extent that these competitors aggressively protect their existing market
share through reduction of pricing and providing other purchasing
incentives to our targeted customers, our financial condition, results of
operations or cash flows could be adversely and seriously affected causing
us to have to cease operations.
5. Complete Reliance on Key Personnel. The possible success of our business is
largely dependent upon the continued services of Mr. Ragsdale. Mr. Ragsdale
expects to devote only the time and effort necessary to perform his
responsibilities as sole executive officer and director. We presently hold
no key-man life insurance on Mr. Ragsdale and have no employment contract
or other agreement with him. The loss of the services of Mr. Ragsdale would
adversely affect our ability to conduct business. We may therefore have to
discontinue operations if we were not able to retain Mr. Ragsdale until a
replacement could be found.
6. Key Personnel Has No Musical Sales Experience; No Assurance Sufficient
Strategic Alliances Can Be Achieved. Although he has no musical instrument
marketing or sales experience, it is critical to our commercial viability
that Mr. Ragsdale be able to use his networking abilities and general
salesmanship to ensure our ability to achieve a commercially viable market
share of the musical instrument sales business. There can be no assurance,
given his lack of specific experience, that Mr. Ragsdale will be able to
successfully solicit and maintain adequate strategic alliances to provide
us with the products and services we need to conduct business.
7. Self-Underwritten Offering Made by Principal Who Has No Relevant Prior
Experience . Because there is no firm commitment for the purchase of
shares, there can be no assurance that we will sell the intended $100,000
minimum. No underwriter, placement agent or other person has contracted
with us to purchase or sell any of the shares offered. Accordingly, no
commitment exists by anyone to purchase any shares and, consequently, we
can give no assurance that any of the shares will be sold. In fact, the
risk is greater in this case since Mr. Ragsdale has not previously
conducted a self-underwritten offering (meaning without the use of
broker-dealers).
8. Proceeds from Sale of Shares May Be Inadequate to Continue Business
Operations. If we receive significantly less than the $1,000,000 maximum,
we may not have the funds to commence or continue with our operations.
Without an infusion of capital or profits, we do not expect to be able to
continue doing business after 12 months from the date of this prospectus.
We do not expect to become a viable business entity until we can obtain
additional equity or debt financing. Our independent certified accountant
has expressed this as a "going concern" qualification on our financial
statements. We do not expect to receive additional revenues until we can
successfully implement our business plan and we do not currently have the
capital to achieve our objective.
9. Offering will be Rescinded if the Minimum Amount of Funds is Not Achieved.
We are endeavoring to sell at least $100,000 worth of shares. There is no
assurance that we will be able to achieve this minimum amount within the
2-9 months allotted for this initial offering. If we cannot sell at least
the $100,000 in shares, we will terminate the entire offering and return
all proceeds from sales at that point. Investors purchasing shares will not
have access to the money paid for the shares until the initial 9-month
offering period has ended. Without this minimum infusion of capital, we
cannot continue doing business beyond 12 months from the date of
prospectus.
10. Operational Costs May Have Been Incorrectly Estimated; There May be
Unforeseen Costs . There can be no assurance that we have correctly
estimated the costs for establishing a client base or for obtaining a
substantial volume of Internet-based musical instrument sales. We may
expend significantly more funds than anticipated without expanding the
business. In such an event, we would not be able to continue operations, as
projected, and would have to close the business.
11. Financing Future Activities Could Lead to Long-Term Debt. While we
currently have no long-term debt, we cannot guarantee that in pursuing the
course of setting up and increasing our business (i.e., acquiring office
space, purchasing equipment, etc.) that we will not accumulate sufficient
debt to decrease our profit margin. If the accumulated debt is
substantially more than the revenues we are capable of generating, we will
not be able to produce a profit and continue doing business.
12. Shares Are Entitled to Dividends but There Are No Current Plans to Pay
Dividends. Each share is entitled to dividends if and when the Board of
Directors decides to distribute dividends. However, we currently have no
plans to pay dividends, either now or for the foreseeable future. We may be
restricted from paying dividends to our shareholders under future credit or
other financing agreements. The amount and frequency of dividends
distributed to shareholders is solely within the discretion of our
management, currently only Mr. William Ragsdale. At present, we will retain
any earnings for the operation and expansion of the business. Moreover, no
assurance can be given that our services and products will be accepted in
the marketplace or that there will be sufficient revenue generated for us
to be profitable.
<PAGE>
13. Issuance of Preferred Stock May Cause the Common Stock to Decrease in
Value. The issuance of preferred stock does not require approval by
shareholders of the common stock. Holders of preferred stock may have the
right to receive dividends, conversions and other rights. These rights and
preferences may be detrimental to the shareholders of the common stock.
Further, the issuance of any shares of preferred stock having rights
superior to those of the common stock may result in a decrease in value of
the market price of the common stock which could be used by the board of
directors as a anti-takeover measure.
14. Broad Discretion of Management with Regard to Application of Proceeds Could
Have an Adverse Effect on Company Growth. The amounts discussed in the
"Application of Proceeds" section indicates the proposed use of proceeds
from this offering. However, management may choose to use these funds in
ways that vary from the usage stated in this prospectus without consent
from the investors. These decisions could have an adverse effect on our
profitability.
15. Arbitrary Offering Price Is in Excess of the Net Tangible Book Value. The
common stock's price per share in this offering has been arbitrarily
determined by Mr. Ragsdale, currently acting as a one-man board of
directors, and bears no relationship to our assets, book value or net
worth. Our offering price per share is substantially in excess of our net
tangible book value as a "start-up" company.
16. Absence of Public Market for Shares Will Adversely Affect the Market Price
and Liquidity of the Shares. There is no public market for our shares of
common stock and no assurance that one will develop. No assurance can be
given that if a market for our shares develops, it will continue. If an
active public market does not develop or is not maintained, the market
price and liquidity of the shares may be adversely affected. Consequently,
if you choose to purchase shares as a result of this offering, you may not
be able to re-sell your shares in the event of an emergency or for any
other reason. Also, the shares may not be readily accepted as collateral
for a loan. Accordingly, you should consider the purchase of shares only as
a long-term investment.
17. Shares Will Be Listed as "Penny Stock" if a Secondary Market Develops for
the Shares. In the event a secondary trading market develops for our
shares, the common stock is expected to come within the meaning of the term
"penny stock." It will, therefore, be less likely that brokers will sell
the shares due to the difficulty imposed by the penny stock regulations in
selling the stock. As long as our common stock is considered penny stock,
the regulations can be expected to have an adverse effect on the liquidity
of any common stock which may develop in the secondary market.
<PAGE>
Related -Party Transactions
The following inherent or potential conflicts of interests should be
considered by prospective investors before subscribing for shares:
Existing Ownership of Shares by Sole Principal
Owner Date Issued No. of Shares Notes
-------------------- ----------- ------------- ------------------------------
William H. Ragsdale 11/24/98 6,000,000 Issued for services (valued at
President and $6,000) performed in setting
Director up the company.
We have no plans to issue any additional securities to management, promoters,
affiliates or associates at the present time. If the Board of Directors adopts
an employee stock option or pension plan, we may issue additional shares
according to the terms of this plan.
Business with Affiliates of the Company
We have only done business with affiliates at the prices and on terms
comparable to those of non-affiliates. The Board of Directors must approve any
related party contract or transaction.
We do not intend to use the proceeds from this offering to make payments
to any promoters, management (except as salaries, benefits and out of pocket
expenses) or any of their affiliates. We have no present intention of acquiring
any assets of any promoter, management or their affiliates or associates. In
addition, we have no current plans to acquire or merge with any business which
our promoters, management or their respective affiliates have an ownership
interest. Although there is no present potential for a related party
transaction, in the event that any payments are to be made to promoters and
management, this information will be disclosed to the shareholders.
There are no arrangements or agreements between non-management
shareholders and management under which non-management shareholders may directly
or indirectly participate in or influence company affairs.
Fiduciary Responsibility of the Company's Management
Our counsel has advised us that we have a fiduciary responsibility for
the safekeeping and use of all company assets. Management is accountable to each
shareholder and required to exercise good faith and integrity with respect to
its affairs. (For example, management cannot commingle the company's property
with the property of any other person, including that of any current or future
member of management.)
The SEC has stated that, to the extent any exculpatory or
indemnification provision includes indemnification for liabilities arising under
the Securities Act of 1933, it is the opinion of the SEC that this
indemnification is contrary to public policy and, therefore, unenforceable.
Shareholders who believe that our management may have violated applicable law
regarding fiduciary duties should consult with their own counsel as to their
evaluation of the status of the law at that time.
According to federal and state statutes, including the Nevada General
Corporation Law, shareholders in a corporation have the right to bring class
action suites in federal court to enforce their rights under federal securities
laws. Shareholders who have suffered losses in connection with the purchase or
sale of their shares may be able to recover any such losses from a corporation's
management where the losses result from a violation of SEC rules. It should be
noted, however, that it would be difficult to establish a basis for liability
that we have not met these SEC standards. This is due to the broad discretion
given the directors and officers of a corporation to act in its best interest.
<PAGE>
Selling Shareholders
The shareholders listed below are offering a total of 1,240,000 shares
in addition to the up to 1,000,000 shares we are selling. The shareholders (not
the company) will receive the proceeds from the sale of their individual shares.
The only selling shareholders who have held a position, office or had
any other material relationship with the company since inception are William H.
Ragsdale, our President and sole director, and Donald A. Mintmire, our legal
counsel. Each selling shareholder may offer all, some or none of the common
stock they own.
<TABLE>
<S> <C> <C>
Amount of Shares
Name of Owner Being Sold Percent of Class
------------- ---------- ---------------
Brannon C. Amtower 20,000 .00276
594 Wimbledon Road, NE, Apt. 6222
Atlanta, GA 30324
JoAnne Reyes 32,000 .00441
6382 Bischoff Road
West Palm Beach, FL 33413
Jessica Acierno 32,000 .00441
106 LaMancha Avenue
Royal Palm Beach, FL 33411
Kevin L. Bell 20,000 .00276
873 Monroe Street
Atlanta, GA 30308
Michael Bunn 20,000 .00276
807 Monroe Street, Apt. 4
Atlanta, GA 30309
Theodore Stechsechulte 32,000 .00441
334 Marble Canyan Drive
Wellington, FL 33414
Rodney D. Ford 20,000 .00276
1440 Druid Valley Drive
Atltanta, GA 30329
Anne-Marie Fourdan 20,000 .00276
1440 Druid Valley Drive
Atltanta, GA 30329
David Geist 20,000 .00276
515 NE 22nd Avenue
Boynton Beach, FL 33435
Brian S. Jansma 20,000 .00276
1825 Charline Avenue, NE
Atlanta, GA 30306
Steve Acierno 20,000 .00276
106 LaMancha Avenue
Royal Palm Beach, FL 33411
Legal Computer Technology, Inc. 32,000 .00441
277 Royal Poinciana Way, Suite 155
Palm Beach, FL 33480
<PAGE>
Amount of Shares
Name of Owner Being Sold Percent of Class
------------- ---------- ---------------
Marco Beach Gardens, Inc. 32,000 .00441
3300 Palm Beach Gardens Boulevard
Suite 500
Palm Beach Gardens, FL 33410
Tricia Roach 32,000 .00441
253 Sandpiper Avenue
Royal Palm Beach, FL 33411
Mary C. McGowan 20,000 .00276
2057 Jordan Terrace NE
Atlanta, GA 30345
Kevin Backer 32,000 .00441
253 Sandpiper Avenue
Royal Palm Beach, FL 33411
Kim Kelley 40,000 .00552
354 Brazilian, #5
Palm Beach, FL 33480
Gretchen Dore 40,000 .00552
7810 Ridgewood Drive
Lake Worth, FL 33467
Donald F. Mintmire 32,000 .00441
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Lionel Obriot 20,000 .00276
960 Taft Avenue, #11
Atlanta, GA 30309
Carmen Ockletree 20,000 .00276
388 McGill Place NE
Atlanta, GA 30312
Douglas Allen Paxton 20,000 .00276
358 8th Street, NE
Atlanta, GA 30309
Cindy Pellerin 20,000 .00276
1628 Martha Jean Place
Tucker, GA 30084
PSJ Holdings, Inc. 32,000 .00441
3300 Palm Beach Gardens Boulevard
Suite 500
Palm Beach Gardens, FL 33410
<PAGE>
Amount of Shares
Name of Owner Being Sold Percent of Class
------------- ---------- ---------------
William H. Ragsdale 20,000 .00276
1515 North Highland, Apt. 3
Atlanta, GA 30306
William H. Ragsdale 500,000 .06906
1515 North Highland, Apt. 3
Atlanta, GA 30306
Paul Safran, Jr. 32,000 .00441
5895 Whirlaway Road
Palm Beach Gardens, FL 33418
Todd Backer 40,000 .00552
------ ------
1239 Benoist Farms Road
Apt. 210
Royal Palm Beach, FL 33411
Total: 1,240,000 .16836
------ ========= ======
</TABLE>
Application of Proceeds
Net proceeds from the sale of the shares of common stock are estimated
to be $970,000 if the 1,000,000 ($1,000,000) maximum number of shares is sold
and $70,000 if only the 100,000 ($100,000) minimum number of shares is sold. We
will not receive any money from the sales of shares by the selling shareholders.
These proceeds will be used to finance the expansion of our activities
as well as for general business purposes. In the event only the minimum sales
are made, we will concentrate our efforts primarily on expanding our lines of
credit. In the event that more than the minimum is sold, we intend to expand
operations, personnel and projects. None of the estimates include income from
revenue. We anticipate receiving income from our day-to-day operations, but
there can be no assurance that this income will be enough to generate a positive
cash flow before the sales from this offering are expended.
<TABLE>
Gross Proceeds (1)(2)
---------------------
<S> <C> <C> >C> <C> <C> <C>
$100,000 $550,000 $1,000,000
-------- -------- ----------
Dollar Dollar Dollar
Amount Percentage Amount Percentage Amount Percentage
------ ---------- ------ ---------- ------ ----------
Offering Expenses $30,000 30.0% $30,000 5.5% $30,000 3.0%
Financing and Funding 60,000 60.0 440,000 80.0 845,000 84.5
Salaries 0 0 30,000 5.4 50,000 5.0
Working Capital 10,000 10.0 50,000 9.1 75,000 7.5
Gross Proceeds 100,000 100.00% 550,000 100.00% 1,000,000 100.00%
======= ======= ======== ======= ========= =======
</TABLE>
(1) In order to begin our operations, we incurred costs for equipment, printing
and related expenditures paid by Mr. Ragsdale. We do not intend to reimburse Mr.
Ragsdale for these costs.
<PAGE>
(2) We reserve the right to change the application of proceeds depending on
unforeseen circumstances at the time of this offering. The intent is to
implement our business plan to the fullest extent possible with funds raised in
this offering.
Capitalization
The following table shows our capitalization as of July 31, 2000 and the
pro forma capitalization on the same date. This information reflects the sale of
the 100,000 shares offered for estimated net proceeds of $0.70 per share. This
information also indicates the sale of 1,000,000 shares offered for estimated
net proceeds of $9.70 per share.
<TABLE>
<S> <C> <C> <C>
As Adjusted
-----------
Actual Minimum Maximum
------ ------- -------
Shareholders' equity
Common stock, $.001 par value; 50,000,000 Shares
authorized; 7,240,000 Shares issued and $7,240 $7,340 $8,240
outstanding; 7,340,000 (Minimum) and 8,240,000
(Maximum) Shares to be issued and outstanding, as
adjusted
Additional Paid-in capital 48,760 148,660 1,047,760
Deficit accumulated during the development stage (18,050) (18,050) (18,050)
Total Shareholders' equity and total capitalization 37,950 137,950 1,037,950
</TABLE>
<PAGE>
Dilution
The following table shows the percentage of equity the investors in this
offering will own compared to the percentage of equity owned by the present
shareholders and the comparative amounts paid for the shares by the investors as
compared to the total consideration paid by our present shareholders.
<TABLE>
Dilution for $100,000 Offering
------------------------------
<S> <C> <C> <C> <C>
Initial public offering price per share $1.00 (100.0%)
Net tangible book value per share before offering $0.005 (0.5%)
Increase per share attributable to new shareholders $0.014 (1.4%)
Pro forma net tangible book value per share after offering $0.019 (1.9%)
Total dilution per share to new shareholders $0.981 (98.1%)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares Purchased Total Consideration
---------------- -------------------
Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
Existing Shares 7,240,000 98.6% $56,000 35.9% $0.008
New Shares 100,000 1.4 $100,000 64.1 $1.00
</TABLE>
<PAGE>
<TABLE>
Dilution for $1,000,000 Offering
--------------------------------
<S> <C> <C> <C> <C>
Initial public offering price per Share $1.00 (100.0%)
Net tangible book value per Share before offering $0.005 (0.5%)
Increase per Share attributable to new Shareholders $0.121 (12.1%)
Pro forma net tangible book value per Share after offering $0.126 (12.6%)
Total dilution per Share to new Shareholders $0.874 (87.4%)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares Purchased Total Consideration
---------------- -------------------
Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
Existing Shares 7,240,000 87.86% $56,000 5.6 $0.008
New Shares 100,000 12.14% $100,000 9.4 $1.00
</TABLE>
The Company
Introduction
ImagineNet Corp. was organized under the laws of Nevada on November 24,
1998. We are a developmental stage company founded by William H. Ragsdale, our
sole executive. At present, our company offices are located at:
222 Lakeview Avenue - Suite 160
West Palm Beach, Florida 33401
(561) 832-5696
We will endeavor to provide, through the burgeoning global e-commerce
distribution network, an alternative to musical instrument purchasers which
would enable customers to make very specific and personal purchasing decisions
at an attractive price point. However, we have generally been inactive to date,
having conducted no business operations except organizational and fund-raising
activities since inception.
Business Objective
Our aim is to sell and distribute musical and related instruments and
devices via the Internet to the general public. To achieve this objective, we
concurrently (i) intend to set up our office, including purchasing additional
equipment; establishing strategic connections within the music and wholesale
musical instrument communities; design and initial implementation of our
website; and marketing, fund-raising activities; and (ii) will set up a
comprehensive website which will allow customers to select and purchase
instruments online at a substantially lower cost than would be the case if
purchased in a traditional music store. The instruments would then be shipped
directly to the client.
Sales and Marketing Plans
We anticipate that our initial sales and marketing efforts will be
focused on advertising and development of an-easy-to-use, customer
service-oriented website from which to sell musical instruments and related
musical devices through the Internet. Our initial marketing plans are designed
to quickly solicit and retain a strong, substantial client base. The development
<PAGE>
of a user-friendly, well designed, website to showcase our products and services
is essential to the success of our business endeavors. We believe our approach
will allow us to quickly penetrate the market, gain brand-name recognition and
develop an inventory of musical instruments appropriate to demand. Although Mr.
Ragsdale does not currently have any experience marketing musical instruments,
he is an accomplished musician and is well-known among musicians in the Atlanta
area. Mr. Ragsdale believes he can leverage his network of contacts, coupled
with his marketing capability, into an attractive business opportunity.
Nonetheless, we will initially be dependent upon him and his unique musical
expertise to establish strategic alliances with musical instrument suppliers and
shippers while developing a customer base of individuals and institutions,
including schools.
Advertising.
It is our belief that the musical instrument industry has not fully
utilized the distribution opportunities offered by the Internet. Our objective
is to provide an e-commerce option to retail and wholesale purchasers of musical
instruments. Accordingly, our primary focus is to develop an Internet site as
our principal point of contact with clients and, as a result of this commitment,
we will not focus on developing conventional advertising, stores or outlets.
e-Commerce Strategy.
Instead, we intend to develop a premium website to be viewed by retail
and wholesale consumers worldwide as the primary source for information on
various musical instrument products accompanied by the best possible pricing
alternatives which the market can support. This website is presently under
development. Once constructed, our home page will contain graphics designed to
accommodate quick launching and display of the entire page even in a dial-up 56K
modem environment. To accomplish this quick launching and display, our page will
be designed as a small sized HTML file, with minimum JPEG graphics and without
the usage of any GIF or related moving graphics. Our objective is simple: to
permit retail and wholesale business viewers to quickly open the home page, to
get down to business and to initiate navigation of the website with minimum wait
for page loading
Easy Home Page Topic Finder. We will design the home page with user
friendly simplicity, without the busy clutter found in many retail and business
focused websites, to facilitate navigation by both retail and corporate users.
The link selections on the home page will be limited to only few major
categories (e.g., "Company Information," "Product Information"). With the
movement of the mouse prompter to a listed category, a window will appear to
reveal the sub-categories, much like the features found in the menu of current
Window-based software. In this manner, the sub-categories are hidden within the
home page which can be easily altered, without any modification required on the
HTML file of the home page. This function allows additional product page links
to be added onto the website with ease and speed in the future. A random search
feature will also be available to visitors to search the website "link tree"
based on a given key word. This feature is essential to the operation of a
marketing website, since each page is too limited in space to provide a list of
all potential search topics without obstructing the actual intended subjects of
the page.
Product Information Links. Each product information subcategory link
will be designed with an intuitive repeatable protocol for easy navigation by
end users and also for easy modification. For example, the percussion
instruments page will include product history and description, brand name
product availability (and associated links), current customer comments (link),
sample request form (link), visitor information questionnaire form to determine
product applicability (link), product information on-demand download link and
email feedback (link). In addition to these features, the product page for
conventional products will also include , for a given item, direct quotes and
order form links. We intend to design our website link features with the
state-of-the art interactivity and fast retrieval of information on demand.
Streaming Video and Audio. Initially, the streaming video to be
incorporated into the website will be limited to the illustration of product
performance. The duration of the video will be short. We have initiated
discussions with local streaming video resellers but have not established any
firm arrangements to date. We intend to provide video packages for large
capacity simultaneous visitors, utilizing a new JAVA technology requiring no end
user viewer installation. We may select streaming audio along with audio slide
show presentations to provide a multimedia presentation of our products and
products of advertisers. Due to the smaller file size, streaming audio
presentation loads faster and streams smoother. It also allows the visitor to
liste
<PAGE>
Website Hosting. We will seek a hosting agent for the website which has
the ability to provide expandable band-width to accommodate any large
simultaneous visitor load. In addition, the hosting agent must also provide
adequate "fire wall" protection against potential hackers which will become an
essential component intrinsic to any client information transmission and client
payment transaction conducted over the website. Any successful hacking against
us which results in shutting down the website will have a detrimental effect on
our business.
Search Engine Listing. We intend to list our website on the ten largest
search engines, including excite@home, yahoo, infoseek, America Online,
LookSmart, About, Alta Vista, Google, DirectHit, Yep and NorthernLight, of which
the latter five search engines use computer algorithms to predict relevance. To
assure accessability and visibility in the search engine listings, we will
employ available services to manually submit the listing on the search engines,
wherever possible once a month, and to enter the submission under several
relevant key categories to enhance hits.
Web Site Improvement.
We also expect to budget some of the funds to improvement of our
website. Some of these improvements may include:
Web Site Hosting Enhancement. We will seek to enhance the capacity of
the web hosting service to accommodate increased file storage capability and
increased visitor capacity. In addition, we will seek to enhance the frequency
and spectrum of the visitor profile feedback report from the hosting agent, of
which the data is proprietary and resalable in the information market. Lastly,
we will seek to improve the security of the website against hackers and
unsolicited information gathering of our visitors.
Streaming Video Enhancement. The product demonstration streaming video
available for many musical instruments will be expanded to include testimonies
from current users. The overall video length will most likely be increased,
along with better quality video scripting and productions.
Initial Revenue Sources. Upon completion and the successful launch of
our first website, we expect to derive revenues from worldwide sales of our
offered musical instruments and from corporate advertisements of services and
products from various musical instrument manufacturers.
Corporate Advertisement Sale. We expect to generate additional income by
selling a limited number of ad spaces on our website to musical instrument
financing firms and to manufacturers. There can be no assurance of our ability
to generate income in this manner.
Competition. In terms of Internet marketing, we believe we are unique in
our approach as a musical instrument focused e-commerce marketer and thus may
experience minimal competition, at least initially. However, e-commerce on the
Internet is a fast growing sector with new entries into the market almost on a
daily basis. We recognize that we will, in due course, face ample competition in
this market.
Disclaimer and Cautionary Statement Related to the Plan of Operation.
Due to the limited proceeds of our prior private offering and the speed of the
advancement of the Internet technology, we reserve the right to alter or abandon
any of the stipulated features and/or activities involving our first website.
Financial Services Offered
At present we plan to provide our prospective retail and business
purchasers with credit card point of purchase on our website. However, we will
also allow for financing companies to advertise their options on our website
which may also provide prospective purchasers an alternative financing option.
<PAGE>
We are presently in discussions to arrange a drop shipping program wherein
customers will be able to access our website to purchase a musical instrument
with their credit card and place their purchase in a shopping cart where the
order will be approved, forwarded to the manufacturer, processed and shipped
directly to the consumer. Returns of products will be handled directly with the
manufacturers which will either repair a defective instrument and/or provide a
cash refund to the consumer less any shipping and handling costs. Each customer
will have their own individual account and a unique password which will keep a
history of each consumer's visit to our website, payment history and a complete
profile of consumer product preferences. Good quality presentations and
professional follow-up with customers will also be critical to our success. We
believe providing a secure, user friendly and entertaining website with
streaming video musical instrument presentations and user feedback will, in many
cases, provide a unique and comfortable option by which a client can utilize our
various musical product offerings (where he may otherwise have none) and thereby
close the sale, especially where financing alternatives are provided.
Expenditures
Our primary direct costs will be as follows:
>> Salaries to Mr. Ragsdale and other employees, as needed (payroll cost,
actual or deferred)
>> Marketing and sales related costs
>> Employment related taxes
>> Health benefits.
Facilities
Initially, we will operate out of the Lakeview avenue offices provided by
Mr. Ragsdale. However, once revenues warrant, we will determine an appropriate
site to locate future facilities.
Debt Financing
We have not yet sought any debt financing since we do not believe we
would qualify for such a loan until we have completed at least two years of
profitable operations. Once we have met this criteria, we intend to seek out
funds from venture capital firms or other funding sources. Since we will not
seek financing until we are operating successfully, we believe we will be in a
better position to negotiate appropriate placement and repayment terms for any
such loans. However, in the event we do receive financing but default in
payments, the financing would result in foreclosure upon our assets to the
detriment of our shareholders.
Although we are presently authorized to borrow funds, we do not intend
to do so until after the two year time-period. When we do seek to borrow funds,
we do not intend to use the proceeds to make payments to our management (except
as salaries, benefits and out-of-pocket expenses).
Reporting
As a reporting company, we are required to file quarterly unaudited
financial reports on Form 10-QSB and annual audited financial reports on Form
10-KSB. In addition, we would be required to file on Form 8-K under certain
specified conditions or those deemed material in character.
Industry Regulation
We are not subject to industry specific regulation. However, we are
subject to usury and other standards relating to permitted maximum rates of
interest and related consumer fraud regulations.
Current Employees and Proposed Staffing
>> Currently Minimal Employees; No Monetary Compensation
We believe Mr. Ragsdale's creativity and salesmanship, when combined
with his musical interests and employment of an Internet e-commerce
<PAGE>
marketing and distribution alternative, make for an attractive business
model. Moreover, we believe this model will be further enhanced by the
advantages of greater availability of capital and potential for growth
by being a public, as compared to a privately-held, company. The time
required to be devoted by Mr. Ragsdale to the day-to-day affairs of the
Company is presently estimated to be approximately five to ten hours per
week. Mr. Ragsdale's time commitment will substantially increase once we
obtain sufficient funding with which to commence our Internet-based
operations, hire employees and search for an appropriate site where our
executive offices can be located.
>> Proposed Additional Personnel
It is expected that additional personnel will be employed to assist in
operations and financial management. We have also identified several
people that are candidates for key positions within the organization. We
have discussed opportunities with some of these individuals and intend
to actively recruit them upon achieving adequate funding. We recognize
that their expertise and experience is essential to the success of our
business. In addition, we intend to also continue to expand our business
and finance advisors.
It is generally anticipated that any future employees will devote full
time to the company. The Board of Directors may then, in its discretion,
approve the payment of cash or non-cash compensation to these employees
for their services.
>> Management
The following table reflects the name, address, age and position of the
executive officer and director. For additional information, see the
biographical information that follows:
<TABLE>
<S> <C> <C>
Name Address Position
---- ------- --------
Mr. William H. Ragsdale 222 Lakeview Avenue -- Suite 160 President, Secretary,
West Palm Beach, Florida 33401 Chief Executive Officer
and Director
</TABLE>
All directors hold office until the next annual meeting of our
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the Board of Directors. Aside from employing Mr.
Ragsdale as officer/director, there are no other individuals whose activities
will be material to our operations at this time.
>> Sole Officer and Director
William H. Ragsdale is a graduate of Oxford University, Cambridge,
England, with an Associates of Arts Degree, and from Emory University
with a Bachelor of Arts Degree. Mr. Ragsdale was employed as an
assistant manager during 1992 and 1993 for The Bread Garden, a
landscaping company. From 1993 to the present, Mr. Ragsdale has owned
and operated Russell Landscaping and Maintenance. In addition, Mr.
Ragsdale plays musical instruments with various bands in the Atlanta,
Georgia area. Mr. Ragsdale believes this familiarity with musicians and
musical instruments and the training and experience is what he brings to
the business. Although he does not have any marketing experience with
musical instruments, we believe Mr. Ragsdale's unique creative skills
with special appreciation of music and extensive networking ability in
the music field will expose us to many business opportunities and sales.
>> Remuneration and Employment Contracts
6,000,000 shares of common stock were issued to Mr. William H. Ragsdale.
Except for this described compensation, it is not anticipated that any
executive officer will receive any cash or non-cash compensation for his
or her services. When we begin operations, it is expected that the Board
of Directors will approve the payment of salaries in a reasonable amount
to our sole officer for his services.
<PAGE>
Although there is no employment agreement in place, Mr. Ragsdale will be
paid compensation at the minimum annual rate of $30,000 in 2000. If only
the minimum amount of shares is sold and no other funds are available,
Mr. Ragsdale's salary will be zero. The balance will be deferred for
each individual until cash flow is available to adequately pay the
larger amount.
>> Compensation of Directors
Until we have $250,000 in sales, no officer or member of the Board of
Directors will be paid separately for their services. Directors'
out-of-pocket expenses will be reimbursed upon presentation of
appropriate documents.
>> Employee Benefits
We do not provide officers with pension, stock appreciation rights,
long-term incentive or other plans but have the intention of
implementing such plans in the future.
We intend to implement a restricted employee stock option plan. Under
this plan, the Board of Directors could grant employees, directors and
certain advisors options to purchase shares at exercise prices of at
least 85% of the then current market price. Income from any such options
is not expected to be tax deferrable. As of the date of this prospectus,
the plan has not been defined and no options have been granted but it is
anticipated that 500,000 Shares will be reserved.
We intend to adopt an employee bonus program to provide incentive to our
employees. This plan would pay bonuses in cash or stock to employees
based upon our pre-tax or after-tax profit for a particular period. We
also intend to adopt a retirement plan, such as a 401(k) retirement
plan, and implement an employee health plan comparable to the industry
standard. Establishment of such plans and their implementation will be
at the discretion of the Board of Directors; any such bonus plan will be
based on annual objective, goal-based criteria developed by the Board of
Directors for eligible participants and will be exercisable only at
prices greater than or equal to the market value of the underlying
shares on the date of their grant.
Litigation
There has never been any material civil, administrative or criminal
proceedings concluded, pending or on appeal against Mr. William H. Ragsdale or
us.
Securities Ownership of Certain Owners and the Principal Shareholder
The following table summarizes certain information with respect to the
beneficial ownership of company shares, immediately prior to and after this
offering. The following table sets forth information as of July 31, 2000,
regarding the ownership of common stock by each shareholder known to be the
owner of more than 10% of the outstanding shares, each director and all
executive officers and directors as a group. Except as otherwise indicated, each
of the shareholders has sole voting and investment power with respect to the
shares of Common Stock beneficially owned.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Prior to the Offering (1) After the Offering
--------------------- ------------------
Minimum (2) Maximum (3)
----------- -----------
Name of and Address of Beneficial Owner: Number % Number % Number %
---------------------------------------- ------ - ------ - ------ -
William H. Ragsdale (1)(2)(3) 6,000,000 82.87 6,000,000 81.74 6,000,000 72.81
All Directors, Officers and
Shareholders as a Group (one person) 6,000,000 82.87 6,000,000 81.74 6,000,000 72.81
Total Shares Outstanding 7,240,000 100.00 7,340,000 100.00 8,240,000 100.00
(1) Based upon 7,240,000 shares of our common stock issued and outstanding
as of July 31, 2000.
(2) Our sole executive officer.
(3) Our sole member of the Board of Directors.
</TABLE>
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Since inception, we have conducted no business operations except for
organizational and capital-raising activities. For the period from inception
through July 31, 2000, we have had no revenue from operations and accumulated
operating expenses amounted to $18,050. We propose to aggressively sell musical
instruments and related devices to the public via the Internet.
If we are unable to generate sufficient revenue from operations to
implement our business plans, we intend to explore all available alternatives
for debt and equity financing, including private and public securities
offerings. Depending upon the amount of revenue generated and/or whether only
the minimum offering is achieved, we believe we will be able to satisfy our cash
requirements for the next 12 months without raising additional funds via debt or
third party funding sources. Nonetheless, we expect we will need to raise
additional funds within the next 6 months, if only a minimal amount of revenue
is generated through operations.
Initially, Mr. Ragsdale will be solely responsible for developing our
business. However, when sufficient capital becomes available, we expect to
employ additional staffing. In addition, we expect to continuously engage in
market research in order to monitor new market trends and other critical
information deemed relevant to our business.
Financial Condition, Capital Resources and Liquidity
>> General
1. At July 31, 2000, we had $37,950 in assets and were free of liabilities.
2. Since inception, we have received $50,000 in cash as payment for the
issuance of shares.
1 Our working capital is presently minimal and there can be no
assurance that our financial condition will improve.
3. Management expects to continue to have minimal working capital or a
working capital deficit as a result of current liabilities.
>> Issuance of Stock
1. At inception, we issued 6,000,000 "founders" shares of common stock
(valued at $6,000) to Mr. William H. Ragsdale for services rendered
in setting up the company.
2. From November 1998 through April 1999, we sold a total of 1,240,000
shares of common stock to Georgia and Florida residents for cash
totaling $50,000. No underwriter was employed in connection with the
offering and sale of the shares. We relied upon an exemption from
registration provided under the securities laws respectively of
Florida and Georgia.
Even though we believe we will obtain sufficient capital with which to
implement our business plan on a limited scale, we do not expect to continue
operations without an infusion of capital. In order to obtain additional equity
financing, management may be required to dilute the interest of existing
shareholders or forego a substantial portion of any revenues.
<PAGE>
Our ability to continue as a going concern is dependent upon our ability
to attract an adequate number of Internet customers.
Net Operating Losses
We have net operating losses carry-forwards of $18,050 expiring at
October 31, 2020. We also have a $2,000 deferred tax asset resulting from the
loss carry-forwards. We have established a 100% valuation allowance for this
asset. Until our current operations begin to produce earnings, our ability to
utilize these carry-forwards is unclear.
Historical Fact Versus Projection and Expectation
Statements contained in this document which are not historical fact are
forward-looking statements based upon management's current expectations. These
subjective assessments are subject to risks and uncertainties that could cause
actual results to differ materially from those stated or implied by the
forward-looking statements.
Recent Accounting Pronouncements
We are aware of all recently issued accounting statements which impact
on our financial statements for the period from November 24, 1998 (inception)
through July 31, 2000.
Absence of Current Public Market
There is no current public trading market for the shares. While we
intend to make application to qualify the shares for quotation on the NASD
Over-the-Counter Bulletin Board ("OTCBB") under the symbol "IMAG" on the same
date we file this prospectus, there is no assurance that we can satisfy the
current pertinent listing standards or, if successful in getting listed, avoid
later de-listing.
Description of Stock
We are authorized to issue 50,000,000 shares of common stock, $.001 par
value. The issued and outstanding shares of common stock being registered are
validly issued, fully paid and non-assessable. The holders of outstanding shares
are entitled to receive dividends out of the assets legally available whenever
and in whatever amounts the Board of Directors may determine. In order to obtain
equity financing, we may be required to dilute the interest of existing
shareholders or forego a substantial portion of our revenues, if any.
All shares have equal voting rights of one vote per share. Shareholders
may vote in all matters to be voted upon by the shareholders. A majority vote is
required on all corporate action. Cumulative voting in the election of directors
is not allowed, which means that the holders of more than 50% of the outstanding
shares can elect all the directors as they choose to do so and, in such an
event, the holders of the remaining shares will not be able to elect any
directors. The shares have no preemptive, subscription, conversion or redemption
rights and can only be issued as fully-paid and non-assessable shares.
Preferred Stock
We are authorized to issue 10,000,000 shares of preferred stock, $.001
par value. The issuance of preferred stock does not require does not require
approval by our shareholders. Shareholders may have the right to receive
dividends, certain preferences in liquidation and conversion and other rights.
Currently, we have no issued and outstanding preferred shares and none are
contemplated.
Transfer Agent
We are serving as our own transfer agent until we become eligible for
quotation on the OTCBB.
<PAGE>
Certain Provisions of Nevada Law
Generally
Shareholders are entitled to one vote per share on all matters to be
voted upon by shareholders. Once payment- in-full is made for the shares, this
right is non-assessable. In the event we go out of business, the shareholders
are entitled to share in all remaining assets after liabilities are paid. There
are no redemption or "sinking fund" provisions or preemptive rights with respect
to the shares. Shareholders have no right to require us to redeem or purchase
shares.
Sections 78.378 - 78.3793 of the Nevada statutes constitute Nevada's
control share statute, which sets forth restrictions on the acquisition of a
controlling interest in a Nevada corporation which does business in Nevada
(directly or through an affiliated corporation) and which has 200 or more
stockholders, at least 100 of whom are stockholders of record and residents of
Nevada. A controlling interest is defined as ownership of common stock
sufficient to enable a person directly or indirectly and individually or in
association with others to exercise voting power over at least 20% but less than
33.3% of the common stock, or at least 33.3% but less than a majority of the
common stock, or a majority or more of the common stock. Generally, any person
acquiring controlling interest must request a special meeting of stockholders to
vote on whether the shares constituting the controlling interest will be
afforded full voting rights, or something less. The affirmative vote of the
holders of a majority of the common stock, exclusive of the control shares, is
binding. If full voting rights are not granted, the control shares may be
redeemed by the company under certain circumstances. If full voting rights are
granted, stockholders voting against such rights being granted may demand
payment from the company for the fair value of their shares. The Board of
Directors may adopt a resolution amending the Bylaws within ten days following
the acquisition of any controlling interest to provide that the foregoing
provisions shall not be applicable to such acquisition. The company does not
believe the foregoing provisions of the Nevada statutes are presently applicable
to it because it does not presently conduct business in Nevada; however, if in
the future it does conduct business in Nevada then such provisions may apply.
Limitation on Liability of Directors. Section 78.037 of the Nevada
statutes provides that a Nevada corporation may limit the personal liability of
a director or officer to the corporation or its stockholders for breaches of
fiduciary duty, except that such provision may not limit liability for acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law, or payment of dividends or other distributions in violation of the Nevada
statutes. The company's Articles provide that no director shall be personally
liable to the company or its stockholders for monetary damages or breach of
fiduciary duty as a director, except for liability (A) for any breach of the
director's duty of loyalty to the company or its stockholders, (B) for acts or
omissions not in good faith or which involved intentional misconduct or a
knowing violation of law, (C) liability under the Nevada statutes, or (D) for
any transaction from which the director derived an improper personal benefit. In
the opinion of the Securities and Exchange Commission, the indemnification and
limitation of liability provisions described in "- Indemnification of Directors
and Officers", above, and "-- Limitation on Liability of Directors" would not
eliminate or limit the liability of directors and officers under the federal
securities laws.
Subscription Procedure
In order to purchase shares:
1. An investor must complete and sign copy of the subscription agreement and
power of attorney.
2. Checks (which should be at least $500) should be made payable as follows:
ImagineNet Corp. -- Attorney Escrow Account.
3. The check and the subscription agreement should be mailed or delivered to
the escrow agent:
Duncan, Blum & Associates
Attn: Carl N. Duncan, Esq.
5718 Tanglewood Drive
Bethesda, Maryland 20817
<PAGE>
You must indicate in the subscription agreement whether your net worth
and/or annual income meet indicated suitability standards set forth in
"Prospectus Summary." In addition, you must indicate that you have received this
prospectus and that you are a citizen or permanent resident of the United
States.
Escrow Account
Funds from the sale of this offering will be retained in an IOLTA
attorney escrow account maintained with our securities counsel. Under pertinent
Maryland regulation, interest will be paid to the Maryland Bar Association for
funding attorney representation for those who cannot otherwise afford counsel.
Accordingly, any interest will not be paid to us or shareholders.
ERISA Considerations
Those who consider purchasing shares on behalf of qualified plans are
urged to consult with tax and ERISA counsel to determine that such a purchase
will not result in a violation of prohibited transaction under ERISA, the
Internal Revenue Code or other applicable law. We will rely on the determination
made by such experts, although no shares will be sold to any plans if we believe
that the sale will result in a prohibited transaction under ERISA or the Code.
Legal Matters
The validity of Shares being offered by this prospectus will be passed
upon for the Company by Duncan, Blum & Associates, Bethesda, Maryland and
Washington, D.C.
Experts
The financial statements included in this prospectus and in the
registration statement have been audited by Durland & Company, CPAs, P.A.,
independent certified public accountants. Their report contains information
regarding our ability to continue doing business.
Available Information
We have filed a Registration Statement on Form SB-1 with the Securities
and Exchange Commission with respect to the securities offered in this
prospectus. This prospectus does not contain all of the information in the
registration statement, certain portions have been omitted pursuant to the rules
and regulations of the SEC. You may inspect and copy the registration statement
at the public reference facilities of the SEC as well as at the SEC's regional
offices:
<TABLE>
Main Office: Regional Offices:
------------ -----------------
<S> <C> <C>
450 Fifth Street, N.W., Seven World Trade Center -- 13th 500 West Madison -- Suite
Washington, D.C. 20549 Floor New York, New York 10048 1400 Chicago, Illinois 60601
</TABLE>
Copies of the registration statement can be obtained from the Public
Reference Section of the SEC's main office. Statements made, in this prospectus
concerning the contents of any documents referred to herein are not necessarily
complete and in each instance, are qualified in all respects by reference to the
copy of the entire document filed as an exhibit to the registration statement.
<PAGE>
For further information about us and the shares of common stock we are
offering, you may inspect a copy of our registration statement and the
associated filing documents at the public reference facilities of the SEC. The
registration statement and related materials have also been filed electronically
with the SEC. Accordingly, these materials can be accessed through the SEC's web
site that contains reports, proxy and information statements and other
information regarding registrants (http// www.sec.gov).
<PAGE>
APPENDIX I
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report.................................................I-2
Balance Sheet................................................................I-3
Statements of Operations.....................................................I-4
Statements of Stockholders' Equity...........................................I-5
Statements of Cash Flows.....................................................I-6
Notes to Financial Statement.................................................I-7
The accompanying notes are an integral part of the financial statements
I-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
ImagineNet Corp.
(A Development Stage Enterprise)
West Palm Beach, Florida
We have audited the accompanying balance sheet of ImagineNet Corp., a
development stage enterprise, as of October 31, 1999, and the related statements
of operations, changes in stockholders' equity and cash flows for the period
from November 24, 1998 (Inception) through October 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ImagineNet Corp. as of October
31, 1999 and the results of its operations and its cash flows for the period
from November 24, 1998 (Inception) through October 31, 1999, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has experienced a loss since inception. The
Company's financial position and operating results raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Durland & Company, CPAs, P.A.
Palm Beach, Florida
December 15, 1999
The accompanying notes are an integral part of the financial statements
I-2
<PAGE>
<TABLE>
ImagineNet Corp.
(A Development Stage Enterprise)
Balance Sheet
<S> <C> <C>
October 31, 1999 July 31, 2000
---------------- ------------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $49,696 $37,950
---------------- ------------------
Total current assets 49,696 37,950
---------------- ------------------
Total Assets $49,696 $37,950
================ ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
Trade $4,812 $0
Related party 2,764 0
---------------- ------------------
Total current liabilities 7,576 0
---------------- ------------------
Total Liabilities 7,576 0
---------------- ------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, authorized 10,000,000 shares;
0 issued and outstanding 0 0
Common stock, $0.001 par value, authorized 50,000,000 shares;
7,240,000 issued and outstanding 7,240 7,240
Additional paid-in capital 48,760 48,760
Deficit accumulated during the development stage (13,880) (18,050)
---------------- ------------------
Total stockholders' equity 42,120 37,950
---------------- ------------------
Total Liabilities and Stockholders' Equity $49,696 $37,950
================ ==================
The accompanying notes are an integral part of the financial statements
I-3
</TABLE>
<PAGE>
<TABLE>
ImagineNet Corp.
(A Development Stage Enterprise)
Statements of Operations
<S> <C> <C> <C> <C>
From From From
November 24, November 24, 1998 November 24,
1998 (Inception) For the Nine (Inception) 1998 (Inception)
through Months Ended Through Through
October 31, 1999 July 31, 2000 July 31, 1999 July 31, 2000
------------------ ---------------- --------------------- --------------------
(unaudited) (unaudited) (unaudited)
Revenues $0 $0 $ 0 $ 0
------------------ ---------------- --------------------- --------------------
General and administrative expenses 304 2,935 4,589 8,050
Accounting fees 4,812 0 0 0
Legal fees - related party 2,764 1,235 2,000 4,000
Services - related party 6,000 0 6,000 6,000
------------------ ---------------- --------------------- --------------------
Total expenses 13,880 4,170 12,589 18,050
---------------- ---------------- --------------------- --------------------
Net loss (13,880) $(4,170) $(12,589) $(18,050)
================ ================ ==================== ====================
Loss per weighted average common share $(.00) (0.$01) (0.002)
================== ================ =====================
Number of weighted average common shares
outstanding 6,870,088 7,240,000 6,733,414
================== ================ =====================
The accompanying notes are an integral part of the financial statements
I-4
</TABLE>
<PAGE>
<TABLE>
ImagineNet Corp.
(A Development Stage Enterprise)
Statements of Stockholders' Equity
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional During the Total
Number of Common Paid-In Development Stockholders'
Shares Stock Capital Stage Equity
-------------- -------------- --------------- ---------------- ---------------
BEGINNING BALANCE, November 24, 1998 0 $0 $0 $0 $0
11/98 - founders' shares ($0.001/sh.) 6,000,000 6,000 0 0 6,000
11/98 - cash ($0.01/sh.) 40,000 40 360 0 400
12/98 - cash ($0.01/sh.) 260,000 260 2,340 0 2,600
4/99 - cash ($0.05/sh.) 940,000 940 46,060 0 47,000
Net loss 0 0 0 (13,880) (13,880)
-------------- -------------- --------------- ---------------- ---------------
BALANCE, October 31, 1999 7,240,000 7,240 48,760 (13,880) 42,120
Net loss 0 0 0 (4,170) (4,170)
-------------- -------------- --------------- ---------------- ---------------
ENDING BALANCE, July 31, 2000 (unaudited) 7,240,000 $7,240 $48,760 $(18,050) $37,950
============== ============== =============== ================ ===============
The accompanying notes are an integral part of the financial statements
I-5
</TABLE>
<PAGE>
<TABLE>
ImagineNet Corp
(A Development Stage Enterprise)
Statements of Cash Flows
<S> <C> <C> <C> <C>
From From From
November 24, November 24, November 24,
1998 (Inception) For the Nine 1998 (Inception) 1998 (Inception)
through Months Ended through through
October 31, 1999 July 31, 2000 July 31, 1999 July 31, 2000
----------------- --------------- ---------------- ----------------
(unaudited) (unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(13,880) $(4,170) $(12,589) $(18,050)
Adjustments to reconcile net loss to net cash used by
operating activities:
Stock issued for services
6,000 0 6,000 6,000
Changes in operating assets and liabilities
Increase in accounts payable - trade
4,812 (4,812) 4,500 0
Increase in accounts payable - related party 2,764 (2,764) 2,000 0
----------------- --------------- ---------------- ----------------
Net cash used by operating activities (304) (11,746) (89) (12,050)
----------------- --------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 50,000 0 50,000 50,000
----------------- --------------- ---------------- ----------------
Net cash provided by financing activities 50,000 0 50,000 50,000
----------------- --------------- ---------------- ----------------
Net increase (decrease) in cash 49,696 (11,746) 49,911 37,950
----------------- --------------- ---------------- ----------------
CASH, beginning of period 0 49,696 0 0
----------------- --------------- ---------------- ----------------
CASH, end of period $49,696 $37,950 $49,911 $37,950
================= =============== ================ ================
The accompanying notes are an integral part of the financial statements
I-6
</TABLE>
<PAGE>
ImagineNet Corp.
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to the nine months ended July 31, 2000
and 1999 is unaudited)
(1) The Company ImagineNet Corp. (the Company) is a Nevada chartered
development stage corporation which conducts business from its headquarters
in West Palm Beach, Florida. The Company was incorporated on November 24,
1998.
The Company has not yet engaged in its expected operations. The
Company's future operations include plans to sell and distribute
musical and related instruments and devices via the Internet. Current
activities include raising additional capital and negotiating with
potential key personnel and facilities. There is no assurance that any
benefit will result from such activities. The Company will not receive
any operating revenues until the commencement of operations, but will
nevertheless continue to incur expenses until then.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Use of estimates The financial statements have been prepared in
conformity with generally accepted accounting principles. In preparing
the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the date of the statements of financial condition and revenues
and expenses for the year then ended. Actual results may differ
significantly from those estimates.
b) Start-Up costs Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of
Position (SOP) 98-5.
c) Net loss per share Basic loss per weighted average common share is
computed by dividing the net loss by the weighted average number of
common shares outstanding during the period.
d) Stock compensation for services rendered The Company issues shares
of common stock in exchange for services rendered. The costs of the
services are valued according to generally accepted accounting
principles and have been charged to operations.
e) Interim financial information The financial statements for the nine
months ended July 31, 2000 and 1999 are unaudited and include all
adjustments which in the opinion of management are necessary for fair
presentation, and such adjustments are of a normal and recurring
nature. The results for the nine months are not indicative of a full
year results.
(2) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.001 par value common stock, and 10,000,000 shares of $0.001 par
value preferred stock. Rights and privileges of the preferred stock are
to be determined by the Board of Directors prior to issuance. The
Company had 7,240,000 shares of common stock issued and outstanding at
July 31, 2000. The Company had issued none of its shares of preferred
stock at July 31, 2000. On November 24, 1998, the Company issued
6,000,000 shares of common stock to its founder and President for
services rendered in connection with the organization of the Company.
During the period ended July 1999, the Company issued 1,240,000 shares
of common stock for $50,000 in cash.
(3) Income Taxes Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax
and financial reporting purposes. The Company had net operating loss
carry- forwards for income tax purposes of approximately $18,050
expiring at October 31, 2020. The amount recorded as deferred tax asset
as of July 31, 2000 is approximately $2,700, which represents the
amount of
The accompanying notes are an integral part of the financial statements
I-7
<PAGE>
ImagineNet Corp.
(A Development Stage Enterprise)
Notes to Financial Statements
(3) Income Taxes (Continued) tax benefit of the loss carry-forward. The
Company has established a 100% valuation allowance against this
deferred tax asset, as the Company has no history of profitable
operations.
(4) Related Parties See Note (2) for shares issued for services.
During the period ended October 31, 1999, a shareholder and general
counsel for the Company performed legal services in the amount of
$2,764 on behalf of the Company. This amount was paid in the first
quarter of fiscal 2000.
(5) Going Concern The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The
Company's financial position and operating results raise substantial
doubt about the Company's ability to continue as a going concern, as
reflected by the net loss of $18,050 accumulated from November 24, 1998
(Inception) through July 31, 2000. The ability of the Company to
continue as a going concern is dependent upon commencing operations,
developing sales and obtaining additional capital and financing. The
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern. The
Company is currently seeking additional capital to allow it to begin
its planned operations.
The accompanying notes are an integral part of the financial statements
I-8
<PAGE>
APPENDIX II
SUBSCRIPTION AGREEMENT
ImagineNet Corp.
Attn: William H. Ragsdale, President
222 Lakeview Avenue - #160-142
West Palm Beach, Florida 33401
By executing this Subscription Agreement (the "Subscription Agreement")
of ImagineNet Corp. (hereafter, the "Company"), the undersigned purchaser
(hereafter, the "Purchaser") hereby irrevocably subscribes for shares of common
stock ("Shares") in the Company. Purchaser herewith encloses the sum of
$___________ ($500 minimum in $500 increments) representing the purchase of
_____ Shares at $1.00 per Share. Subscriptions, whether checks or wire
transfers, should be made payable to ImagineNet Corp. -- Attorney Escrow Account
and forwarded to the Escrow Agent, Duncan, Blum & Associates (Attn: Carl N.
Duncan, Esq.), 5718 Tanglewood Drive, Bethesda, Maryland 20817. If this
Subscription Agreement is accepted, the Purchaser agrees to contribute the
amount enclosed to the Company.
Purchaser represents that he, she or it has (i) a net worth of at least
$100,000 (exclusive of home, furnishings and automobiles) or (ii) a net worth
(similarly calculated) of at least $50,000 and an annual adjusted gross income
of at least $25,000. Purchaser represents that he meets these financial
requirements and that he is of legal age. Purchaser is urged to review carefully
the responses, representations and warranties he is making herein. Purchaser
agrees that this subscription may be accepted or rejected in whole or in part by
the Company in its sole and absolute discretion.
READ THIS PROSPECTUS CAREFULLY BEFORE YOU SUBSCRIBE. CONTAINED HEREIN ARE
DISCLOSURES CONCERNING VARIOUS RISKS, CONFLICTS, FEES AND EXPENSES RELATING TO
OR TO BE PAID BY THE COMPANY.
The undersigned is reminded that:
(1) The Shares are speculative investments, the purchase of which involves a
high degree of risk of loss of the entire investment of the undersigned in
the Company.
(2) S/he is encouraged to discuss the proposed purchase with her/his attorney,
accountant or a Purchaser Representative (as defined under the Securities
Act of 1933, as amended) or take the opportunity to do so, and is satisfied
that s/he has had an adequate opportunity to ask questions concerning the
Company, the Shares and the offering described in the Prospectus.
(3) No federal or state agency has passed upon the adequacy or accuracy of the
information set forth in the Prospectus or made any finding or
determination as to the fairness of the investment, or any recommendation
or endorsement of the Shares as an investment.
(4) S/he must not be dependent upon a current cash return with respect to
her/his investment in the Shares. S/he understands that distributions are
not required (and are not expected) to be made.
(5) The Company is not a "tax shelter" and the specific tax consequences to
her/him relative to as an investment in the Company will depend on her/his
individual circumstances.
<PAGE>
Representations
Purchaser makes the following representations in order to permit the
Company to determine his suitability as a purchaser of Shares:
(1) The undersigned has received the Company's Prospectus and the exhibits
thereto.
(2) The undersigned understands that the Company has made all documents
pertaining to the transactions described in the Company's Prospectus
available to the undersigned in making the decision to purchase the Shares
subscribed for herein.
(3) If the Shares are being subscribed for by a pension or profit-sharing plan,
the undersigned independent trustee represents that s/he has reviewed the
plan's portfolio and finds (considering such factors as diversification,
liquidity and current return and projected return of the portfolio) this
purchase to be a prudent investment under applicable rules and regulations,
and acknowledges that no representation is made on behalf of the Company
that an investment in the Company by such plan is suitable for any
particular plan or constitutes a prudent investment thereby. Moreover, the
undersigned independent trustee represents that s/he understands that
income generated by the Company may be subject to tax, that s/he is
authorized to execute such subscription on behalf of the plan or trust and
that such investment is not prohibited by law or the plan's or trust's
governing documents.
The undersigned understands and agrees that this subscription may be
accepted or rejected by the Company in whole or in part, in its sole and
absolute discretion. The undersigned hereby acknowledges and agrees that this
Subscription Agreement shall survive (i) non-material changes in the
transactions, documents and instruments described in the Prospectus, (ii) death
or disability of the undersigned and (iii) the acceptance of this subscription
by the Company. By executing this Subscription Agreement below, the undersigned
(i) acknowledge the accuracy of all statements and (ii) appoints the management
of the Company to act as his true and lawful attorney to file any documents or
take any action required by the Company to carry out its business activities.
The foregoing information which the undersigned has provided to the
Company is true and accurate as of the date hereof and shall be true and
accurate as of the date of the undersigned's admission as a Shareholder. If in
any respect such representations, warranties or information shall not be true
and accurate at any time prior to the undersigned's admission as a Shareholder,
s/he will give written notice of such fact to the Company, specifying which
representation, warranty or information is not true and accurate and the reason
therefor.
By executing this Subscription Agreement, the undersigned certifies, under
penalty of perjury:
(1) That the Social Security Number or Taxpayer Identification Number provided
below is correct; and
(2) That the IRS has never notified him that s/he is subject to 20% backup
withholding, or has notified her/him that s/he is no longer subject to such
backup withholding. (Note: If this part (2) is not true in your case,
please strike out this part before signing.)
(3) The undersigned is a U.S. citizen or resident, or is a domestic
corporation, partnership or trust, as defined in the Internal Revenue Code
of 1986, as amended. (Note: If this part (3) is not true in your case,
please strike out this part before signing.)
(4) That the undersigned acknowledges and agrees that this information may be
disclosed to the Internal Revenue Service by the Company and that any false
statement contained herein is punishable by fine, imprisonment or both. The
undersigned will notify the Company within sixty (60) days of the date upon
which any of the information contained herein becomes false or otherwise
changes in a material manner, or the undersigned becomes a foreign person.
The undersigned agrees to update this information whenever requested by the
Company. Under penalties of perjury, the undersigned declares that the
undersigned has examined the information contained herein and to the best
of the undersigned's knowledge and belief, it is true, correct and
complete, and that the undersigned has the authority to execute this
Subscription Agreement.
<PAGE>
This Subscription Agreement and the representations and warranties
contained herein shall be binding upon the heirs, executors, administrators and
other successors of the undersigned. If there is more than one signatory hereto,
the obligations, representations, warranties and agreements of the undersigned
are made jointly and severally. By executing this agreement, you are not waiving
any rights under federal law.
The undersigned is the following kind of entity (please check):
|_| Individual |_| IRA
|_| Joint Account - JTWROS |_| Pension Plan
|_| Joint Account - TENCOM |_| Trust
|_| UGMA (Gift to Minor) |_| Non-Profit Organization
|_| Partnership |_| Employee of NASD member firm
|_| Corporation |_| Other (Specify)
Dated this ____ day of __________ of 1999
Mr./Ms. ____________________________ ______________________________________
Purchaser's Name Social Security or Tax ID#
Mr./Ms. ____________________________ ______________________________________
Name of Second Purchaser Date of Birth of First Purchaser
____________________________________ (__________)__________________________
Street Address of First Purchaser Business Phone (Day)
____________________________________ (__________)__________________________
City State and Zip Code Home Phone
____________________________________ ______________________________________
Signature of First Purchaser Email address (if applicable)
(Individual, Custodian or
Officer or Partner of Entity)
____________________________________
Signature of Second Purchaser
(if applicable)
NOTE: If a joint subscription, please indicate whether joint tenants with right
of survivorship (JTWROS) or tenants in common (TENCOM). Each joint tenant or
tenant in common must sign in the space provided. If purchaser is a trust,
partnership, corporation or other business association, the signing trustee,
partner or officer represents and warrants that he/she/it has full power and
authority to execute this Subscription Agreement on its behalf. If Purchaser is
a trust or partnership, please attach a copy of the trust instrument or
partnership agreement. If Purchaser is a corporation, please attach certified
corporate resolution authorizing signature.
<PAGE>
<TABLE>
<S> <C>
No dealer, salesperson or other
individual has been authorized to give Selling Shareholders May Also Be Selling
any information or to make any 1,240,000 Additional Shares
representations not contained in this
Prospectus in connection with the $100,000 - $1,000,000 of Shares of
Offering covered by this Prospectus. If Common Stock at $1.00 per Share
given or made, such information or
representation must not be relied upon as
having been authorized by the Company.
This Prospectus does not constitute as an
offer to sell, or a solicitation of an
offer to buy, the common stock in any
jurisdiction where, or to any person to
whom, it is unlawful to make such offer
or solicitation. Neither the delivery of
this Prospectus nor any sale made
hereunder shall, under any circumstances,
create an implication that there has not
been any change in the facts set forth in
this Prospectus or in the affairs of the IMAGINENET CORP.
Company since the date hereof.
TABLE OF CONTENTS
Descriptive Title Page
Prospectus Summary.....................3
Summary Financial Data.................4 PROSPECTUS
Risk Factors...........................4
Related Party Transactions.............6
Fiduciary Responsibility of
the Company's Management..........7 December____, 2000
Selling Shareholders...................7
Application of Proceeds............. 10
Capitalization........................11
Dilution..............................11
The Company...........................12
Management's Discussion and
Analysis of Financial Condition Until January ___, 2001 (25 days after the date
and Results of Operations........18 hereof), all dealers effecting transactions in the
Absence of Current Public Market registered securities, whether or not
and Dividend Policy..............19 participating in this distribution, may be
Description of Capital Stock..........19 required to deliver a current copy of this
Subscription Procedure................20 Prospectus. This delivery requirement is in
ERISA Considerations..................21 addition to the obligation of dealers to deliver a
Legal Matters.........................21 Prospectus when acting as underwriters and with
Experts.............................. 21 respect to their unsold allotments or
Available Information.................21 subscriptions.
Appendix I (Financial Statements)....I-1
Appendix II (Subscription Agreement..II-1
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 1. Indemnification of Directors and Officers
Reference is made to "Fiduciary Responsibility of Registrant's
Management" and "Description of Capital Stock" contained in the Prospectus
relating to the indemnification of Registrant's officers, directors,
stockholders, employees and affiliates. The Registrant is prohibited from
indemnifying its affiliates for liabilities resulting from violations or alleged
violations of the Securities Act of 1933 or any state securities laws in
connection with the issuance or sale of the shares of common stock, except in
the case of successful defense of an action in which such violations are
alleged, and then only if a court approves such indemnification after being
appraised of relevant regulatory positions on indemnification.
Specifically, each director or officer of Registrant will be indemnified
by us against expenses (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the director or officer
in connection with the defense or settlement of any threatened, pending or
completed action, suite or proceeding; whether civil, criminal, administrative
or investigative; in which he is involved by reason of the fact that he is or
was a director or officer of Registrant; such indemnification, of course, is
conditioned upon such officer or director having acting in good faith and in a
manner that he reasonably believed to be in or not opposed to the best interests
of Registrant and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe that his conduct was unlawful. If, however, any
threatened, pending or completed action, suit or proceeding is by or in the
right of Registrant, the director or officer shall not be indemnified in respect
ao any claim, issue or matte as to which he is adjudged to be liable to us
unless a court determines otherwise.
Moreover, the Certificate of Incorporation of Registrant provides that
no director of Registrant shall be personally liable to us or any of our
shareholders for monetary damages for any breach of fiduciary duty as a
director, except with respect to: (i) any breach of the director's duty to
loyalty to us or its shareholders; (ii) for acts or omissions that are not in
good faith or involve intentional misconduct or a knowing violation of the law;
(iii) violation of the Nevada Uniform Securities Act; or (iv) for any
transaction from which the director derived an improper personal benefit. In
addition, such Certificate of Incorporation authorizes us to indemnify any
person to the fullest extent permitted by Nevada Corporation Law.
Item 2. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the approximate amount of the fees and
expenses paid by the Registrant and affiliates as described in the Prospectus.
Approximate
Amount*
Securities and Exchange Commission registration fee...... $591.36
Printing expenses ....................................... 2,500.00
Accounting fees and expense ............................. 4,000.00
Legal (including Blue Sky) fees..........................20,000.00
Escrow expenses.......................................... 500.00
Miscellaneous expenses .................................. 2,408.64
--------
TOTAL ..........................................$30,000.00
==========
* The offering expenses are expected to be the same irrespective of whether the
$100,000 minimum or $1,000,000 maximum is raised.
<PAGE>
Item 3. Undertakings
A. Certificates: Inapplicable
B. Rule 415 Offering
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement to: (i) include any prospectus
required by Section 10(a) (3) of the Securities Act of
1933 (the "1933 Act"); (ii) reflect in the Prospectus any
facts or events which, together, represent a fundamental
change in the information in the Registration Statement;
and (iii) include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the 1933 Act, treat each
post-effective amendment as a new Registration Statement
of the securities offered, and the offering of the
securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at
the end of the offering.
C. Request for Acceleration of Effective Date
The Registrant may elect to request acceleration of the effective date
of the Registration Statement under Rule 461 of the 1933 Act.
D. Indemnification
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
E. Rule 430A
The undersigned Registrant will:
(1) For determining any liability under the Act, treat the information
omitted from the form of Prospectus filed as part of this Registration
Statement in reliance upon Rule 430A and contained in the form of a
Prospectus filed by the Registrant under Rule 424(b) (1) or (4) or
497(h) under the Act as part of this Registration Statement as of the
time the Commission declared it effective.
(2) For any liability under the 1933 Act, treat each post-effective
amendment that contains a form of Prospectus as a new Registration
Statement for the securities offered in the Registration Statement, and
that the offering of the securities at that time as the initial bona
fide offering of those securities.
<PAGE>
Item 4. Recent Sales of Unregistered Securities
On November 24, 1998, the Company issued 6,000,000 shares of restricted
common stock to Mr. William H. Ragsdale, the President and Director of the
Company, and record and beneficial owner of approximately 82.9% of the Company's
outstanding common stock, for founders services. The founders' shares were
issued pursuant to 4(2) of the Act to its then only shareholder and director.
From October through April 1999, the Company issued and sold 1,240,000
shares of unrestricted common stock to Georgia and Florida residents for cash
consideration totaling $50,000. No underwriter was employed in connection with
the offering and sale of the shares. The Company claimed the exemption from
registration in connection with each of the offerings provided under Section
3(b) of the Act and Rule 504 of Regulation D promulgated there under.
The facts relied upon by the Company to make the federal exemption
available include the following: (i) the aggregate offering price for the
offering of the shares of common stock did not exceed $1,000,000, less the
aggregate offering price for all securities sold within the twelve months before
the start of and during the offering of the shares in reliance on any exemption
under Section 3(b) of, or in violation of Section 5(a) of, the Act; (ii) no
general solicitation or advertising was conducted by the Company in connection
with the offering of any of the shares; (iii) the fact that the Company has not
been since its inception (a) subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended; (b) an "investment
company" within the meaning of the Investment Company Act of 1940, as amended;
or (c) a development stage company that either has no specific business plan or
purpose or has indicated that its business plan is to engage in a merger or
acquisition with an unidentified company or companies, or other entity or
person; and (iv) the required number of manually executed originals and true
copies of Form D were duly and timely filed with the U.S. Securities and
Exchange Commission.
Item 5. Index to Exhibits
(a)(1) Financial Statements -- Included in Prospectus:
Independent Certified Public Accountants' Report.
Balance Sheet as of July 31, 2000
Statement of Changes in Shareholder's Equity for the Period November 24,
1998 (Date of Formation) through July 31, 2000
Notes to Financial Statements.
(a)(2) Included Separately from Prospectus: Consent of Independent Public
Accountants.
Schedules are omitted for the reason that all required information is
contained in the financial statements included in the Prospectus.
(b) Exhibits:
3.1 Article of Incorporation of Registrant.
3.2 Bylaws of Registrant
3.3 Form of Stock Certificate
3.4 Subscription Agreement and Power of Attorney (attached to the
Prospectus as Exhibit A).
5.1 Opinion of Counsel as to the legality of the Shares.
23.1 Consent of Counsel (Duncan, Blum & Associates).
23.2 Consent of Auditors (Durland & Company, CPAs, P.A.).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-1 and has duly caused this
Registration Statement to be signed on its behalf by the Undersigned, thereunto
duly authorized, in the City of West Palm Beach, State of Florida, on the
______th day of November, 2000.
ImagineNet Corp.
By: /s/ William H. Ragsdale
-----------------------------------------
William H. Ragsdale, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person in his
respective capacity as officer and/or director of the Registrant on the date
indicated.
Signatures Title Date
---------- ----- ----
/s/ William H. Ragsdale November 21, 2000
-------------------------- President, CEO
William H. Ragsdale and Director
/s/ William H. Ragsdale
--------------------------- Treasurer, Chief Financial November 21, 2000
William H. Ragsdale Officer and Secretary
<PAGE>
